What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-06-02 compared with 2022-03-10 · 98 added, 118 removed, 176 unchanged (55% of the section changed)

27 unchanged sentences

We do not focus in the short-term on maximizing prices charged, but instead seek to maintain what we believe is a perception among our members of our “pricing authority” on quality goods – consistently providing the most competitive values.

Our investments in merchandise pricing may include reducing prices on merchandise to drive sales or meet competition and holding prices steady despite cost increases instead of passing the increases on to our members, all negatively impacting gross margin as a percentage of net sales (gross margin percentage).

Merchandise costs in the third quarter and first thirty-six weeks of 2022 were impacted by inflation higher than what we have experienced in recent years.

The impact to our net sales and gross margin is influenced in part by our merchandising and pricing strategies in response to cost increases.

Those strategies can include, but are not limited to, working with our suppliers to share in absorbing cost increases, earlier-than-usual purchasing and in greater volumes, offering seasonal merchandise outside its season, the chartering of container vessels and leasing of containers as well as passing cost increases on to our members.

Our investments in merchandise pricing may include reducing prices on merchandise to drive sales or meet competition and holding prices steady despite cost increases instead of passing the increases on to our members, all negatively impacting gross margin and gross margin as a percentage of net sales (gross margin percentage).

We believe our gasoline business draws members, but it generally has a lower gross margin percentage relative to our non-gasoline business.

6 unchanged sentences

The degree of our exposure is dependent on (among other things) the type of goods, rates imposed, and timing of the tariffs.

Merchandise costs in the second quarter and first half of 2022 were impacted by inflation higher than what we have experienced in recent years.

The impact to our net sales and gross margin is influenced in part by our merchandising and pricing strategies in response to cost increases.

While these potential impacts are uncertain, they could have an adverse impact on our results.

1 unchanged sentence

As our warehouse base grows, available and desirable sites become more difficult to secure, and square footage growth becomes a comparatively less substantial component of growth.

The negative aspects of such growth, however, including lower initial operating profitability relative to existing warehouses and cannibalization of sales at existing warehouses when openings occur in existing markets, are continuing to decline in significance as they relate to the results of our total operations.

relate to the results of our total operations.

Our rate of operating floor space square footage growth is generally higher in foreign markets, due to the smaller base in those markets, and we expect that to continue.

9 unchanged sentences

This may cause us, for example, to absorb costs that other employers might seek to pass through to their workforces.

Because our business operates on very low margins, modest changes in various items in the consolidated statements of income, particularly merchandise costs and selling, general and administrative expenses, can have substantial impacts on net income.

Because our business operates on very low margins, modest changes in various items in the consolidated statements of income, particularly merchandise costs and SG&A expenses, can have substantial impacts on net income.

Our operating model is generally the same across our U.S., Canadian, and Other International operating segments (see Note 9 to the condensed consolidated financial statements included in Part I, Item 1, of this Report).

6 unchanged sentences

Our fiscal year ends on the Sunday closest to August 31.

References to the second quarter of 2022 and 2021 relate to the 12-week fiscal quarters ended February 13, 2022, and February 14, 2021.

References to the first half of 2022 and 2021 relate to the 24 weeks ended February 13, 2022, and February 14, 2021.

References to the third quarter of 2022 and 2021 relate to the 12-week fiscal quarters ended May 8, 2022, and May 9, 2021.

References to the first thirty-six weeks of 2022 and 2021 relate to the 36 weeks ended May 8, 2022, and May 9, 2021.

Certain percentages presented are calculated using actual results prior to rounding.

Unless otherwise noted, references to net income relate to net income attributable to Costco.

Highlights for the second quarter of 2022 versus 2021 include:

• Net sales increased 16% to $50,937, driven by an increase in comparable sales of 14% and sales at 25 net new warehouses opened since the end of the second quarter of 2021;

Highlights for the third quarter of 2022 versus 2021 include:

• Net sales increased 16% to $51,612, driven by an increase in comparable sales of 15% and sales at 20 net new warehouses opened since the end of the third quarter of 2021;

• Membership fee revenue increased 9% to $984, driven by new member sign-ups, upgrades to Executive Membership, and an increase in our renewal rate;

• Gross margin percentage decreased 32 basis points, driven primarily by our core merchandise categories, partially offset by our warehouse ancillary and other businesses, primarily gasoline;

• SG&A expenses as a percentage of net sales decreased 94 basis points, primarily due to leveraging increased sales and ceasing of incremental wages related to COVID-19;

• Gross margin percentage decreased 99 basis points, driven primarily by our core merchandise categories and a LIFO charge for higher merchandise costs;

• SG&A expenses as a percentage of net sales decreased 84 basis points, primarily due to leveraging increased sales;

• We incurred a one-time $77 pretax charge, primarily related to granting our employees one additional day of vacation under the new employee agreement that was effective March 14, 2022;

• Net income was $1,353, $3.04 per diluted share, compared to $1,220, $2.75 per diluted share in 2021;

• On January 20, 2022 our board declared a quarterly cash dividend of $0.79 per share, which was paid on February 18, 2022;

• Subsequent to the end of the quarter, in mid-March we will be increasing various wages and benefits, consistent with the three-year cycle on which this has been done historically.

significant are increases of a minimum of fifty cents per hour for U.S.

and Canada wage scales.

Certain other bonuses and benefits will be increasing for many employees.

The estimated incremental annualized pre-tax costs of these increases, after considering our normal annual increases is approximately $275.

Further, an additional $85 will be recorded in the third fiscal quarter related to a one-time true-up to accrued benefits, related to these wage and benefit changes.

The COVID-19 pandemic continued to impact our business in the second quarter of 2022, albeit to a lesser extent.

• On April 13, 2022, our board declared a quarterly cash dividend of $0.90 per share, which was paid on May 13, 2022.

The COVID-19 pandemic continued to impact our business in the third quarter of 2022, albeit to a lesser extent.

COVID-related and other supply and logistics constraints have continued to adversely affect some merchandise categories and are expected to do so for the foreseeable future.

During the second quarter and first half of fiscal 2021, we paid $246 and $458 in incremental wages related to COVID-19, which ceased in February 2021.

During the third quarter and first thirty-six weeks of fiscal 2021, we paid $57 and $515 in incremental wages related to COVID-19, which ceased in February 2021.

RESULTS OF OPERATIONS

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

$ 51,612 $ 44,376 $ 151,966 $ 130,611

14 unchanged sentences

Total Company 11 % 15 % 11 % 15 %

Net sales increased $7,049 or 16%, and $14,119 or 16% during the second quarter and first half of 2022.

This improvement was attributable to an increase in comparable sales of 14% and 15% in the second quarter and first half of 2022, and sales at the 25 net new warehouses opened since the end of the second quarter of 2021.

While sales in all core merchandise categories and warehouse ancillary and other businesses increased, the rate of increase was strongest in our gasoline, business centers, and travel businesses.

Sales continued to be impacted by inflation, higher than what we experienced in the first quarter of fiscal 2022.

During the second quarter of 2022, higher gasoline prices positively impacted net sales by $1,713, or 390 basis points, compared to 2021, with a 44% increase in the average price per gallon.

The volume of gasoline sold increased approximately 25%, positively impacting net sales by $814, or 185 basis points.

Net sales increased $7,236 or 16%, and $21,355 or 16% during the third quarter and first thirty-six weeks of 2022.

This improvement was attributable to an increase in comparable sales of 15% in both the third quarter and first thirty-six weeks of 2022, and sales at the 20 net new warehouses opened since the end of the third quarter of 2021.

While sales increased in all core merchandise categories and warehouse ancillary and other businesses, the rate of increase was strongest in our gasoline, business centers, and travel businesses.

Sales continued to be impacted by inflation, higher than what we experienced in the comparable periods of 2021 and earlier this fiscal year.

During the third quarter of 2022, higher gasoline prices positively impacted net sales by $2,270, 511 basis points, compared to 2021, with a 42% increase in the average price per gallon.

The volume of gasoline sold increased approximately 24%, positively impacting net sales by $1,082, 244 basis points.

Changes in foreign currencies relative to the U.S.

dollar negatively impacted net sales by approximately $281, or 64 basis points, compared to the second quarter of 2021, primarily attributable to our Other International operations.

During the first half of 2022, higher gasoline prices positively impacted net sales by $3,559, or 413 basis points, compared to 2021, with a 46% increase in the average price per gallon.

The volume of gasoline sold increased approximately 26%, positively impacting net sales by $1,620, or 188 basis points.

dollar negatively impacted net sales by approximately $476, 107 basis points, compared to the third quarter of 2021, primarily attributable to our Other International operations.

During the first thirty-six weeks of 2022, higher gasoline prices positively impacted net sales by $5,829, 446 basis points, compared to 2021, with a 44% increase in the average price per gallon.

The volume of gasoline sold increased approximately 25%, positively impacting net sales by $2,701, 207 basis points.

Changes in foreign currencies relative to the U.S.

dollar positively impacted net sales by approximately $101, or 12 basis points, compared to the first half of 2021, primarily attributable to our Canadian operations, partially offset by our Other International operations.

dollar negatively impacted net sales by approximately $379, 29 basis points, compared to the first thirty-six weeks of 2021, primarily attributable to our Other International operations, partially offset by our Canadian operations.

Comparable Sales

Comparable sales increased 14% and 15% in the second quarter and first half of 2022, and were positively impacted by increases in shopping frequency and the average ticket, which includes the effects of inflation and changes in foreign currency.

E-commerce comparable sales increased 13% in the second quarter and first half of 2022.

Comparable sales increased 15% in both the third quarter and first thirty-six weeks of 2022, and were positively impacted by increases in the average ticket and shopping frequency, which includes the effects of inflation and changes in foreign currency.

E-commerce comparable sales increased 7% and 11% in the third quarter and first thirty-six weeks of 2022.

Membership Fees

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Membership fees $ 984 $ 901 $ 2,897 $ 2,643

2 unchanged sentences

Total cardholders (000s) 116,600 109,800 — —

Membership fee revenues increased 10% in both the second quarter and first half of 2022, driven by sign-ups and upgrades to Executive Membership.

At the end of the second quarter of 2022, our member renewal rates were 92% in the U.S.

Membership fee revenues increased 9% and 10% in the third quarter and first thirty-six weeks of 2022, driven by sign-ups and upgrades to Executive Membership.

At the end of the third quarter of 2022, our member renewal rates were 92% in the U.S.

and Canada and 90% worldwide.

4 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Net sales $ 51,612 $ 44,376 $ 151,966 $ 130,611

4 unchanged sentences

Quarterly Results

Total gross margin percentage decreased 99 basis points compared to the third quarter of 2021.

Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 10.65%, a decrease of 53 basis points.

This was primarily due to a 46 basis-point decrease in core merchandise categories, due to decreases in fresh foods and non-foods and 27 basis points due to a LIFO charge for higher merchandise costs.

Gross margin was positively impacted by 18 basis points related to our warehouse ancillary and other businesses, predominantly gasoline, and three basis points due to 2% rewards.

Gross margin was negatively impacted by one basis point due to the net impact of a one-time charge related to granting our employees one additional day of vacation under the new employee agreement and the ceasing of incremental wages related to COVID-19.

We expect the LIFO charge in our fourth quarter of fiscal 2022 to be substantially higher than the fourth quarter of fiscal 2021.

Changes in foreign currencies relative to the U.S.

dollar negatively impacted gross margin by approximately $51, compared to the third quarter of 2021.

The gross margin of core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), decreased 39 basis points.

1 unchanged sentence

This measure eliminates the impact of changes in sales penetration and gross margins from our warehouse ancillary and other businesses.

Total gross margin percentage decreased 32 basis points compared to the second quarter of 2021.

Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 11.01%, an increase of five basis points.

This was primarily due to a 49 basis-point increase in warehouse ancillary and other businesses, predominantly gasoline.

Gross margin was also positively impacted by 14 basis points due to decreased incremental wages related to COVID-19, which ended February 28, 2021.

Gross margin was negatively impacted due to a 43 basis-point decrease in all core merchandise categories, predominantly fresh foods and foods and sundries, 14 basis points due to a LIFO charge for higher merchandise costs, and one basis-point due to increased 2% rewards.

Changes in foreign currencies relative to the U.S.

dollar negatively impacted gross margin by approximately $31, compared to the second quarter of 2021, primarily attributable to our Other International operations.

Gross margin on a segment basis, when expressed as a percentage of the segment's own sales and excluding the impact of changes in gasoline prices on net sales (segment gross margin percentage), increased in our U.S.

and Canadian segment, due to warehouse ancillary and other businesses and ceasing of incremental wages related to COVID-19, partially offset by core merchandise categories.

segment was also negatively impacted due to the LIFO charge.

Gross margin percentage decreased in our Other International segment due to decreases in core merchandise categories and increased 2% rewards, partially offset by warehouse ancillary and other businesses and ceasing of incremental wages related to COVID-19.

segment performed similarly to the results above.

Gross margin percentage in our Canadian segment was negatively impacted due to decreases in core merchandise categories and warehouse ancillary and other businesses.

Gross margin percentage in our Other International segment was negatively impacted due to decreases in core merchandise categories, partially offset by warehouse ancillary and other businesses.

Our Other International segment was also negatively impacted due to increased 2% rewards.

All our segments benefited from the ceasing of incremental wages related to COVID-19.

Year-to-date Results

Total gross margin percentage decreased 60 basis points compared to the first thirty-six weeks of 2021.

Excluding the impact of gasoline price inflation on net sales, gross margin was 11.05%, a decrease of 17 basis points.

This was primarily due to a 38 basis-point decrease in core merchandise categories, predominantly driven by decreases in fresh foods and foods and sundries, and 15 basis points due to a LIFO charge for higher merchandise costs.

Warehouse ancillary and other businesses positively impacted gross margin by 27 basis points, predominantly gasoline.

Gross margin was positively impacted by nine basis points due to the net impact of ceasing incremental wages related to COVID-19 and the negative impact of a one-time charge related to granting our employees one additional day of vacation under the new employee agreement.

Changes in foreign currencies relative to the U.S.

dollar negatively impacted gross margin by approximately $43, compared to the first thirty-six weeks of 2021, attributable to our Other International operations, partially offset by our Canadian operations.

The gross margin of core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), decreased 28 basis points.

The decrease was primarily due to fresh foods, and foods and sundries, partially offset by non-foods.

Total gross margin percentage decreased 40 basis points compared to the first half of 2021.

Excluding the impact of gasoline price inflation on net sales, gross margin percentage was flat as compared to the first half of 2021.

Warehouse ancillary and other businesses, predominantly gasoline, increased 31 basis points.

Gross margin was also positively impacted by 13 basis points due to ceasing of incremental wages related to COVID-19.

Gross margin was negatively impacted due to a 34 basis-point decrease in core merchandise categories, predominantly foods and sundries, and fresh foods.

Gross margin was also negatively impacted by nine basis points due to a LIFO charge for higher merchandise costs and one basis-point due to increased 2% rewards.

The segment gross margin percentage increased in our U.S.

segment and performed similarly to the quarterly results above.

Gross margin percentage decreased in our Canadian segment, primarily due to decreases in core merchandise categories partially offset by warehouse ancillary and other businesses.

Gross margin percentage decreased in our Other International segment due to decreases in core merchandise categories and increased 2% rewards, partially offset by increases in warehouse ancillary and other businesses.

The decrease was across all categories, most significantly in fresh foods.

The segment gross margin percentage decreased in our U.S.

and Canadian segment.

Gross margin decreased in core merchandise categories, partially offset by warehouse ancillary and other businesses.

segment was also negatively impacted due to the LIFO charge.

The gross margin percentage decreased in our Other International segment due to decreases in core merchandise categories and increased 2% rewards, partially offset by increases in warehouse ancillary and other businesses.

All our segments benefited from the ceasing of incremental wages related to COVID-19.

1 unchanged sentence

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

SG&A expenses $ 4,450 $ 4,199 $ 13,743 $ 12,870

3 unchanged sentences

Excluding the impact of gasoline price inflation the decrease was 44 basis points.

Ceasing incremental COVID-19 wages reduced expenses by 42 basis points.

Central operating costs were lower by 10 basis points and warehouse operations and other businesses were lower by nine basis points, largely attributable to leveraging increased sales.

Stock compensation expense was lower by two basis points.

Warehouse operations and other businesses were lower by 35 basis points, largely attributable to leveraging increased sales.

This includes the impact of the starting wage increase we instituted in October 2021, as well as eight weeks of the increased wages and benefits that were effective on March 14, 2022.

Central operating costs were lower by 10 basis points, and stock compensation expense was lower by one basis point.

SG&A was negatively impacted by two basis points due to the net impact of a one-time charge related to granting our employees one additional day of vacation under the new employee agreement and the ceasing of incremental wages related to COVID-19.

Changes in foreign currencies relative to the U.S.

dollar positively impacted SG&A expenses by approximately $23, compared to the second quarter of 2021, primarily attributable to our Other International operations.

dollar positively impacted SG&A expenses by approximately $39, compared to the third quarter of 2021.

Year-to-date Results

SG&A expenses as a percentage of net sales decreased 80 basis points compared to the first half of 2021.

SG&A expenses as a percentage of net sales decreased 81 basis points compared to the first thirty-six weeks of 2021.

Excluding the impact of gasoline price inflation the decrease was 45 basis points.

SG&A expenses were positively impacted by a net 28 basis points due to the ceasing of incremental wages related to COVID-19, partially offset by a write-off of certain information technology assets.

Warehouse operations and other businesses were lower by 10 basis points, largely attributable to payroll and benefits, primarily due to leveraging increased sales.

Central operating costs were lower by eight basis points.

Stock compensation expense was lower by one basis point.

Pre-opening expenses were higher by one basis point.

The first half of fiscal 2022 includes the permanent $1 increase for hourly employees in our warehouses and distribution channels that began in March 2021, and beginning in October 2021, the additional starting wage increase from $16 and $16.50 to $17 and $18.

Warehouse operations and other businesses were lower by 18 basis points, largely attributable to leveraging increased sales.

This includes the impact of the starting wage increase we instituted in October 2021 as well as eight weeks of the increased wages and benefits that were effective on March 14, 2022.

SG&A was positively impacted by a net 18 basis points due to ceasing incremental wages related to COVID-19, a write-off of certain information technology assets and a one-time charge related to granting our employees one additional day of vacation under the new employee agreement.

Central operating costs were lower by eight basis points, and stock compensation expense was lower by one basis point.

Changes in foreign currencies relative to the U.S.

dollar positively impacted SG&A expenses by approximately $37, compared to the third quarter of 2021, primarily attributable to our Other International operations.

Interest Expense

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Interest expense $ 35 $ 40 $ 110 $ 119

Interest expense is primarily related to Senior Notes.

Interest expense decreased in the second quarter and first half of 2022 due to early repayment of the 2.300% Senior Notes on December 1, 2021.

Interest expense decreased in the third quarter and first thirty-six weeks of 2022 due to early repayment of the 2.300% Senior Notes on December 1, 2021.

Interest Income and Other, Net

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Interest income $ 6 $ 8 $ 21 $ 29

Foreign-currency transaction gains (losses), net 12 (1) 38 7

Foreign-currency transaction gains, net 56 6 94 13

Other, net 9 13 23 33

Interest income and other, net $ 71 $ 27 $ 138 $ 75

Interest income decreased in the second quarter and first half of 2022 due to lower interest rates, partially offset by higher average cash and investment balances.

Foreign-currency transaction gains (losses), net include the revaluation or settlement of monetary assets and liabilities by our Canadian and Other International operations and mark-to-market adjustments for forward foreign-exchange contracts.

Foreign-currency transaction gains, net include the revaluation or settlement of monetary assets and liabilities by our Canadian and Other International operations and mark-to-market adjustments for forward foreign-exchange contracts.

See Derivatives and Foreign Currency sections in Item 8, Note 1 of our Annual Report on Form 10-K, for the fiscal year ended August 29, 2021.

1 unchanged sentence

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Provision for income taxes $ 455 $ 417 $ 1,287 $ 1,004

Effective tax rate 24.9 % 25.2 % 24.2 % 22.9 %

The effective tax rate for the first half of 2022 was impacted by net discrete tax benefits of $91, which primarily related to the first quarter.

The effective tax rate for the first thirty-six weeks of 2022 was impacted by net discrete tax benefits of $114, which were primarily related to the first quarter.

This included $91 of excess tax benefits related to stock compensation.

Excluding discrete net tax benefits, the tax rate was 26.4% for the first half of 2022.

The effective tax rate for the first half of 2021 was impacted by net discrete tax benefits of $136, which was primarily related to the first quarter.

This included $75 of excess tax benefits related to stock compensation and $70 related to the special cash dividend paid through the 401(k) plan.

Excluding net discrete tax benefits, the tax rate was 26.4% for the first half of 2021.

Excluding discrete net tax benefits, the tax rate was 26.3% for the first thirty-six weeks of 2022.

The effective tax rate for the first thirty-six weeks of 2021 was impacted by net discrete tax benefits of $157, which was primarily related to the first quarter.

This included $75 of excess tax benefits related to stock compensation, $70 related to the special cash dividend paid through the 401(k) plan, and $19 primarily related to a reduction in the valuation allowance against certain deferred tax assets.

Excluding net discrete tax benefits, the tax rate was 26.4% for the first thirty-six weeks of 2021.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

36 Weeks Ended

2022 February 14,

Net cash provided by operating activities $ 4,886 $ 6,018

2 unchanged sentences

Our primary sources of liquidity are cash flows generated from our operations, cash and cash equivalents, and short-term investments.

Cash and cash equivalents and short-term investments were $12,296 and $12,175 at February 13, 2022, and August 29, 2021.

Of these balances, unsettled credit and debit card receivables represented approximately $1,993 and $1,816 at February 13, 2022, and August 29, 2021.

Cash and cash equivalents and short-term investments were $11,831 and $12,175 at May 8, 2022, and August 29, 2021.

Of these balances, unsettled credit and debit card receivables represented approximately $2,152 and $1,816 at May 8, 2022, and August 29, 2021.

These receivables generally settle within four days.

3 unchanged sentences

Management believes that our cash and investment position and operating cash flows, with capacity under existing and available credit agreements, will be sufficient to meet our liquidity and capital requirements for the foreseeable future.

Management also believes that our U.S.

current and projected asset position is sufficient to meet U.S.

Management also believes that our current and projected U.S.

asset position is sufficient to meet U.S.

liquidity and capital requirements.

Cash Flows from Operating Activities

Net cash provided by operating activities totaled $3,659 in the first half of 2022, compared to $2,685 in the first half of 2021.

Net cash provided by operating activities totaled $4,886 in the first thirty-six weeks of 2022, compared to $6,018 in the first thirty-six weeks of 2021.

Our cash flow provided by operations is primarily derived from net sales and membership fees.

1 unchanged sentence

Cash used in operations also includes payments for income taxes.

Changes in our net investment in merchandise inventories (the difference between merchandise inventories and accounts payable) is impacted by several factors, including how fast inventory is sold, the forward deployment of inventory to accelerate delivery times to our members, payment terms with our suppliers, and the amount paid early to obtain discounts from our suppliers.

Changes in our net investment in merchandise inventories (the difference between merchandise inventories and accounts payable) is impacted by several factors, including how fast inventory is sold, the forward deployment of inventory to accelerate delivery times to our members, earlier than usual purchasing in anticipation of cost increases, payment terms with our suppliers, and the amount paid early to obtain discounts from our suppliers.

Cash Flows from Investing Activities

Net cash used in investing activities totaled $1,393 in the first half of 2022, compared to $1,037 in the first half of 2021, and is primarily related to capital expenditures.

Net cash used in investing activities totaled $2,428 in the first thirty-six weeks of 2022, compared to $2,380 in the first thirty-six weeks of 2021, and is primarily related to capital expenditures.

Net cash from investing activities also includes purchases and maturities of short-term investments.

2 unchanged sentences

Capital is also required for information systems, manufacturing and distribution facilities, initial warehouse operations, and working capital.

In the first half of 2022, we spent $1,778 on capital expenditures, and it is our current intention to spend approximately $4,000 during fiscal year 2022.

In the first thirty-six weeks of 2022, we spent $2,632 on capital expenditures, and it is our current intention to spend approximately $4,000 during fiscal year 2022.

These expenditures are expected to be financed with cash from operations, existing cash and cash equivalents, and short-term investments.

We opened 14 new warehouses, including one relocation, in the first half of 2022 and plan to open 15 to 18 additional new warehouses, including up to three relocations, in the remainder of fiscal 2022.

We opened 17 new warehouses, including three relocations, in the first thirty-six weeks of 2022 and plan to open 10 additional new warehouses in the remainder of fiscal 2022.

There can be no assurance that current expectations will be realized, and plans are subject to change upon changes in capital expenditure needs or the economic environment.

Cash Flows from Financing Activities

Net cash used in financing activities totaled $1,667 in the first half of 2022, compared to $5,350 in the first half of 2021.

Cash flow used in financing activities was primarily related to repayments of our 2.300% Senior Notes, withholding taxes on stock-based awards, the payment of dividends, and repurchases of common stock.

In the first half of 2021, cash flow used in financing was primarily due to the payment of a special dividend.

On January 20, 2022, our Board declared a quarterly cash dividend of $0.79 per share payable to shareholders of record on February 4, 2022, which was paid on February 18, 2022.

Net cash used in financing activities totaled $2,343 in the first thirty-six weeks of 2022, compared to $5,769 in the first thirty-six weeks of 2021.

Cash flow used in financing activities was primarily related to repayments of our 2.300% Senior Notes, the payment of dividends, withholding taxes on stock-based awards, and repurchases of common stock.

In the first thirty-six weeks of 2021, cash flow used in financing was primarily due to the payment of a special dividend.

On April 13, 2022, our Board declared a quarterly cash dividend of $0.90 per share payable to shareholders of record on April 29, 2022, which was paid on May 13, 2022.

Share Repurchase Program

During the first half of 2022 and 2021, we repurchased 236,000 and 521,000 shares of common stock, at an average price per share of $498.00 and $361.52, totaling approximately $118 and $189.

amounts may differ from the repurchase balances in the accompanying condensed consolidated statements of cash flows due to changes in unsettled repurchases at the end of a quarter.

During the first thirty-six weeks of 2022 and 2021, we repurchased 490,000 and 1,040,000 shares of common stock, at an average price per share of $523.61 and $353.87, totaling approximately $257 and $368.

These amounts may differ from the repurchase balances in the accompanying condensed consolidated statements of cash flows due to changes in unsettled repurchases at the end of a quarter.

Purchases are made from time to time, as conditions warrant, in the open market or in block purchases, pursuant to plans under SEC Rule 10b5-1.

2 unchanged sentences

We maintain bank credit facilities for working capital and general corporate purposes.

At February 13, 2022, we had borrowing capacity under these facilities of $1,034.

Our international operations maintain $550 of the total borrowing capacity under bank credit facilities, of which $195 is guaranteed by the Company.

Short-term borrowings outstanding under the bank credit facilities were immaterial at the end of the second quarter of 2022, and at the end of 2021.

At May 8, 2022, we had borrowing capacity under these facilities of $1,006.

Our international operations maintain $522 of this capacity under bank credit facilities, of which $182 is guaranteed by the Company.

Short-term borrowings outstanding under the bank credit facilities were immaterial at the end of the third quarter of 2022 and at the end of 2021.

The Company has letter of credit facilities, for commercial and standby letters of credit, totaling $225.

The outstanding commitments under these facilities at the end of the second quarter of 2022 totaled $201, most of which were standby letters of credit which do not expire or have expiration dates within one year.

The bank credit facilities have various expiration dates, most of which are within one year, and we generally intend to renew these facilities.

The outstanding commitments under these facilities at the end of the third quarter of 2022 totaled $198, most of which were standby letters of credit that do not expire or have expiration dates within one year.

The bank credit facilities have various expiration dates, most within one year, and we generally intend to renew these facilities.

The amount of borrowings available at any time under our bank credit facilities is reduced by the amount of standby and commercial letters of credit outstanding.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis